What Mortgage Surveys in 2007 Depict
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
What 2007 Mortgage Surveys Reveal
Summary:
The August 2007 survey on US mortgages highlights a significant market downturn attributed to lowered treasury yields.Insights:
The August 2007 survey on US mortgages reveals a notable market decline due to decreased treasury yields. As a result, fixed-rate mortgages for both 30-year and 15-year terms have dropped.
Several major lenders have declared bankruptcy, halting all related transactions. In the second quarter of 2007, half of the prior borrowers, who paid off their initial loans and applied for new ones, saw an average increase of one-eighth in their mortgage rates for 30-year fixed-rate loans.
The survey indicates that the share of refinance loans dropped to 42 percent in the second quarter and is expected to decline further in the latter half of 2007. Additionally, many refinancing deals concluded in the second quarter resulted in substantial cash flow.
Despite higher mortgage rates in the second quarter of 2007, the overall demand for refinancing decreased. Companies anticipate further declines, potentially resulting in refinance rates being only a third of new mortgage applications in the second half of 2007.
The Cash-Out Refinance Report 2007 also highlights refinanced assets during this period, noting a moderate house-price appreciation, lower than the adjusted 25 percent of the first quarter.
Homeowners with significant equity could invest in home improvements or other ventures; however, slowing home appreciation means new buyers will build less equity and have fewer opportunities to leverage it effectively.
Stabilizing this sudden mortgage market disruption may take longer than expected. Home prices might drop by 20% from their 2006 peak. Some forecasts suggest a 25% decline, which seemed less drastic just last year.
Repayments are becoming unsustainably expensive, with house values falling below what homeowners owe. Congress reported that January 2007 mortgage adjustments to market rates totaled $22 billion. Such rearrangements contribute significantly to rising foreclosures.
Most mortgage adjustments are scheduled for the following year, suggesting that the current high foreclosure rates are influenced by existing conditions. This will continue to strain housing plans, although relief is expected over time?"but not in the coming months.
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